A Hierarchical Model of Health Care Delivery in New York State

Abstract

One of the major problems facing the United States is the escalating cost of health care. Although the rate of inflation, in general, has declined, inflation in health care cost is steadily increasing. Health care is one of the major items of federal, state, and local budgets, and it must be controlled in order to reduce deficits. The main reason for this escalation in health care is the rise in hospital costs. The population of the United States is aging, and there will be significant transformation of its demographic structure. Due to the high cost of services and sophisticated equipment, as well as counter-productive reimbursement policy, the operations of many hospitals are becoming economically inefficient. As a consequence, many hospitals are either closing or becoming increasingly dependent on a high level of subsidies from public agencies. Besides, due to the low rate of population growth, the demand for health care may not rise significantly, and, in many cases, hospitals have to be maintained with large numbers of empty beds, particularly in some regions.